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MOturkey
12-26-2012, 08:06 PM
Hey, I know this is the wrong forum, but does anyone know if the rules for depreciation of new equipment purchased before the end of the year has changed any? In other words, can you still deduct the full amount of equipment purchased prior to January 1, like we have been able to do in the past? I've been plugging numbers into my tax forms (Turbo Tax), to see if it would warrant my buying a new leftover mower right now, rather than waiting until next spring, but TT says that section won't be ready until approximately January 10, because the IRS is still working on it.

If I'm not mistaken, in prior years claiming the whole purchase price has been basically the same thing as that additional amount being listed as additional expenses. If that is true, it would pay me to buy now. If not, I will probably just wait until May, when the warranty on my oldest Z runs out. Thanks.

Quix
12-26-2012, 08:24 PM
I am not positive what will happen. I gave my account my preliminary business info for her to review a couple weeks ago. She said my expenses were down, drought for sure. I mentioned I was thinking of an equipment purchase, wasn't sure if I wanted to do it this year or next. Her reply was that if I was going to make the purchase anyway to do it this year, that's where the Magna Matic came in.
I don't think anyone knows for sure just yet. As no one knows what the heck our tax rate will be.

DA Quality Lawn & YS
12-26-2012, 09:46 PM
As far as I know, you can still take the Sec. 179 deduction and expense out equipment purchases in full in the year purchased. Just remember if you sell the equipment before its depreciable life is up, you may end up owing some of the write off back on a future return.

Richard Martin
12-27-2012, 09:04 AM
Section 179 has a maximum of $139,000 with a 50% depreciation above that in the first year up to $560,000. Section 179 drops to $25,000 next year with a 50% depreciation above that up to $200,000.

Duekster
12-27-2012, 09:06 AM
I think Mr Martin is correct

Richard Martin
12-27-2012, 09:13 AM
The AMT is going to hold everything up this year. The rules for 2012 have not been legislated yet and no one can write any software until that is done. Not even the IRS. If the patch isn't applied to the 2012 taxes then a whole lot of people (millions) will owe a mountain of taxes that they weren't expecting to.

scotts lawn care
12-27-2012, 09:32 AM
This is why I bought my new truck this month. I'm gonna need maybe half of it to 179 this year. I hope the tax laws don't change!

My CPA has not said anything yet for changes. Not a bad idea to buy the equipment this month - if you need it.

Duekster
12-27-2012, 09:36 AM
I heard the AMT is flawed, has been flawed but more so now than ever because of inflation or something.

I am not sure about this Fiscal Cliff thing. I know it raises taxes on everyone but it also cuts spending.

Richard Martin
12-27-2012, 09:47 AM
I heard the AMT is flawed, has been flawed but more so now than ever because of inflation or something.

The basic figures have never been adjusted. Originally the law was intended to get more taxes out of high wage earners. At that time a high wage earner made about $33,000 a year. Here we are decades later and the average wage has risen to over $43,000. You can see the problem.

MOturkey
12-27-2012, 10:01 AM
Section 179 has a maximum of $139,000 with a 50% depreciation above that in the first year up to $560,000. Section 179 drops to $25,000 next year with a 50% depreciation above that up to $200,000.

Thanks, Richard. That is the information I was looking for. I recalled reading there was to be a change, but wasn't sure when it went into effect, or if it totally eliminated the Section 179 depreciation. It is kind of a pain when you need to make a decision before the end of the year, but you can't run the numbers to make an educated one.

Duekster
12-27-2012, 10:06 AM
Thanks, Richard. That is the information I was looking for. I recalled reading there was to be a change, but wasn't sure when it went into effect, or if it totally eliminated the Section 179 depreciation. It is kind of a pain when you need to make a decision before the end of the year, but you can't run the numbers to make an educated one.

That has been the primary complaint of many people for the last 4 years and it has just gotten worse.

Hard to do a business plan when you do not know the impact of various government positions / cost implications of Health Care and Taxes. :hammerhead:

MOturkey
12-27-2012, 10:07 AM
I heard the AMT is flawed, has been flawed but more so now than ever because of inflation or something.

I am not sure about this Fiscal Cliff thing. I know it raises taxes on everyone but it also cuts spending.

I know this is a change of subject, but I really can't wrap my head around the fact the idiots in Washington can't reach some type of compromise. I'm quite conservative, but I don't see why, in this case, only the rich should shoulder the burden. I think everyone's taxes should go up slightly, with the increase being more the higher your earnings.

Duekster
12-27-2012, 10:09 AM
The basic figures have never been adjusted. Originally the law was intended to get more taxes out of high wage earners. At that time a high wage earner made about $33,000 a year. Here we are decades later and the average wage has risen to over $43,000. You can see the problem.

To boot, I hear it does not even catch the intended target.

Duekster
12-27-2012, 10:11 AM
I know this is a change of subject, but I really can't wrap my head around the fact the idiots in Washington can't reach some type of compromise. I'm quite conservative, but I don't see why, in this case, only the rich should shoulder the burden. I think everyone's taxes should go up slightly, with the increase being more the higher your earnings.

IMHO the entire tax system needs an overhaul. If the system is soo complicated that even Timmy gets tripped up there is a problem. :laugh:

Richard Martin
12-27-2012, 10:17 AM
I know this is a change of subject, but I really can't wrap my head around the fact the idiots in Washington can't reach some type of compromise. I'm quite conservative, but I don't see why, in this case, only the rich should shoulder the burden. I think everyone's taxes should go up slightly, with the increase being more the higher your earnings.

And at the end of the day, the Republicans know this. Even the Tea Partians know this. But they also want real, meaningful cuts and the other side refuses to go along. 1 trillion dollars over 10 years is nothing. The true borrowing rate of the US Givernment is north of $7 trillion a year. Over 10 years it will total close to 100 trillion dollars with inflation. That's a 1% cut and that will do no good.

Duekster
12-27-2012, 10:36 AM
And at the end of the day, the Republicans know this. Even the Tea Partians know this. But they also want real, meaningful cuts and the other side refuses to go along. 1 trillion dollars over 10 years is nothing. The true borrowing rate of the US Givernment is north of $7 trillion a year. Over 10 years it will total close to 100 trillion dollars with inflation. That's a 1% cut and that will do no good.

Service on the debt alone could bankrupt the US. Recently bonds had to be indexed to inflation just so they could sell them. Even then the Fed has to buy the Treasuries and that is a clear sign we are all but done and will cause inflation. That will increase the cost to service the debt. This is a serious problem that has been ignored for about 25 years.

I am good with increased taxes too but please get spending under control. We were promised cuts in 1986 with those tax reforms but they never came, or they were too few.

dhardin53
12-27-2012, 10:47 AM
I may be wrong, I have a tax accountant do my taxes. But when I did all my own taxes and from advice of my accounts recently I was nerve advised to take any new parches offer several thousand in a one years lump. It was or is divided into 5 or 7 years write off. It will cause to much of a effect on your profit. Buying something every year and itemizing it out in 5 years ends up being a consistent deduction over time.

If you buy a $40.000 truck this years and deduction it in one year it is to easily to show a loss and cause a red flag.

Again I know things have changed, but my accounts is having me continue with 5 years on smaller amounts and used equipment. Then 7 years on newer and high dollar purchase.

Kelly's Landscaping
12-27-2012, 10:50 AM
I can go along with tax revenue going up I didn't say rates I said revenue. The clown wants 1.6 trillion over 10 years so be it thats what 160 billion more a year that can be done. BUT were spending 1.3 trillion a year more than we take in so when all is said and done hes proposing to pay for 1 year out of the next 10 :clapping::clapping::clapping::clapping::clapping: My hero :laugh::laugh:

We have a spending problem not a taxing problem lets talk spending cuts 500 billion in cuts per year so 5 trillion in 10 years. Lets talk spending freezes till this thing balances out. The problem the republicans have here is the left isn't serious about this issue and haven't been in a century. And the reason we are going over the cliff is its a win win for Obama if we go over we pay more taxes he's always been in favor of that. If we don't go over we keep our rates and he lies and claims paying the same rate is really a tax cut. As much as he would like to raise your rates he would rather lie about its always been more fun for them. The right does have one weapon here they can refuse to raise the debt limit which we are nearly at AGAIN!

Duekster
12-27-2012, 10:50 AM
I may be wrong, I have a tax accountant do my taxes. But when I did all my own taxes and from advice of my accounts recently I was nerve advised to take any new parches offer several thousand in a one years lump. It was or is divided into 5 or 7 years write off. It will cause to much of a effect on your profit. Buying something every year and itemizing it out in 5 years ends up being a consistent deduction over time.

If you buy a $40.000 truck this years and deduction it in one year it is to easily to show a loss and cause a red flag.

Again I know things have changed, but my accounts is having me continue with 5 years on smaller amounts and used equipment. Then 7 years on newer and high dollar purchase.



I tend to agree. It bites to take a 30K deduction one year and pay the note for 5 years.

If it were say a backpack or something less than say 2 K. Just take it in one year.

Now if you pay cash for for new truck then take the single year deduction

I think that was kind of the orginal intent of the 179.... take small items at once....

Duekster
12-27-2012, 10:55 AM
I can go along with tax revenue going up I didn't say rates I said revenue. The clown wants 1.6 trillion over 10 years so be it thats what 160 billion more a year that can be done. BUT were spending 1.3 trillion a year more than we take in so when all is said and done hes proposing to pay for 1 year out of the next 10 :clapping::clapping::clapping::clapping::clapping: My hero :laugh::laugh:

We have a spending problem not a taxing problem lets talk spending cuts 500 billion in cuts per year so 5 trillion in 10 years. Lets talk spending freezes till this thing balances out. The problem the republicans have here is the left isn't serious about this issue and haven't been in a century. And the reason we are going over the cliff is its a win win for Obama if we go over we pay more taxes he's always been in favor of that. If we don't go over we keep our rates and he lies and claims paying the same rate is really a tax cut. As much as he would like to raise your rates he would rather lie about its always been more fun for them. The right does have one weapon here they can refuse to raise the debt limit which we are nearly at AGAIN!

The frustration from a business management perspective is not knowing what is happening, we have not known in the last 4 years and we still do not know.

Kelly's Landscaping
12-27-2012, 11:02 AM
If you buy a $40.000 truck this years and deduction it in one year it is to easily to show a loss and cause a red flag.


I'm sorry but why be afraid of a legitimate deduction? So what if it causes a red flag and I doubt it does they know what trucks costs. If you have a receipt and followed their codes too the letter they got nothing on you.

Duekster
12-27-2012, 11:11 AM
I'm sorry but why be afraid of a legitimate deduction? So what if it causes a red flag and I doubt it does they know what trucks costs. If you have a receipt and followed their codes too the letter they got nothing on you.

I do not worry about red flags either since I book my taxes straight up. :waving:

But on the other hand he made some decent points. I have taken 179 and I have taken regular deductions. I find taking the regular deductions over 5 years gives me a better feel for my company's performance.

I need to go in and manually add depreciation to Quick books now. The last adviser I spoke to mentioned that to me. It helps accurately reflect my assets and value.

Kelly's Landscaping
12-27-2012, 11:16 AM
The frustration from a business management perspective is not knowing what is happening, we have not known in the last 4 years and we still do not know.

No argument with me there and its even worse than that because add into the mix signals on tax codes is Departments being allowed to write their own regulations. Something that never should have been allowed. Law makers are who were charged to write the laws in this country they were not suppose to write abominations like they do now. Reason know one knows much on the health care law is its not written yet. The authority to write regulations as they please has been but the actual details aren't and even if they were it doesn't matter cause they have their own authority to rewrite and change them at will.

Same with every other act epa or osha basically every major piece of legislation in the past century starting with teddy confiscating private lands and make them federal parks and forests. A better example today would be the new Nazi party in this country and where they live now the wet lands commissions. Sit at a zoning hearing one day then come out and tell me how free we are.

larryinalabama
12-27-2012, 11:19 AM
Does anyone know if this is the last year for the 100% dectution???
I thought it was and made necessary purchases throught the year.

Duekster
12-27-2012, 11:27 AM
No argument with me there and its even worse than that because add into the mix signals on tax codes is Departments being allowed to write their own regulations. Something that never should have been allowed. Law makers are who were charged to write the laws in this country they were not suppose to write abominations like they do now. Reason know one knows much on the health care law is its not written yet. The authority to write regulations as they please has been but the actual details aren't and even if they were it doesn't matter cause they have their own authority to rewrite and change them at will.

Same with every other act EPA or OSHA basically every major piece of legislation in the past century starting with teddy confiscating private lands and make them federal parks and forests. A better example today would be the new Nazi party in this country and where they live now the wet lands commissions. Sit at a zoning hearing one day then come out and tell me how free we are.

I think we have well over 30 regulatory agencies at the federal level and most states have mirror agencies.

OSHA is fairly static but the EPA is very dynamic and getting technical and legal challenges on both sides.

I see some wisdom in the concept of the legislation turning over the rule making to a group of scientist in the case of the EPA, or accountants in the case of the IRS. But you know something is wrong with the IRS is fined by they EPA for boiler emissions.

Likewise, Timmy did not do his taxes correctly and is now over the department of treasury.

It is tough on the little business guy to try and keep up with everything. Lucky for us, most businesses are exempt from many regulations when under 10 or 15 or so employees. The problems is you may not know when you cross the line and now have to comply with something new.

Duekster
12-27-2012, 11:30 AM
Does anyone know if this is the last year for the 100% dectution???
I thought it was and made necessary purchases throught the year.
I think so at the higher level.
I think as Richard said, it will revert to the 25K cap for 100% and then 50% up to X$.

larryinalabama
12-27-2012, 11:49 AM
I think so at the higher level.
I think as Richard said, it will revert to the 25K cap for 100% and then 50% up to X$.

Thanks, that still works in my world but will suck for larger companies.

Has far as taxes go larryinalabama plans on more fishing, and staying at the ranch a whole lot more.

Duekster
12-27-2012, 11:56 AM
Thanks, that still works in my world but will suck for larger companies.

Has far as taxes go larryinalabama plans on more fishing, and staying at the ranch a whole lot more.

It is hard to say but maybe there is a reason why someone like Aaron Rents leases all those NPR's and turns them in every 3 to 4 years. Sure makes for a good supply of used box trucks for us poor folks. Still I wonder about the logic.

dhardin53
12-28-2012, 01:02 AM
Again I am only going by what my account advised me. "AMT may be avoided by staying out of the $150,000 to $415,000 income range". And with the dry year I had I have no worries of going over 150 grand this year. I was close in years past but I am slowing down. The government is always changing the bar so how knows about this year or next.

OK no one jump to conclusion now. This is household income not all mowing income. Wife works, my retirement income, investment income and my mowing income.

GreenI.A.
12-28-2012, 01:44 AM
I may be wrong, I have a tax accountant do my taxes. But when I did all my own taxes and from advice of my accounts recently I was nerve advised to take any new parches offer several thousand in a one years lump. It was or is divided into 5 or 7 years write off. It will cause to much of a effect on your profit. Buying something every year and itemizing it out in 5 years ends up being a consistent deduction over time.

If you buy a $40.000 truck this years and deduction it in one year it is to easily to show a loss and cause a red flag.

Again I know things have changed, but my accounts is having me continue with 5 years on smaller amounts and used equipment. Then 7 years on newer and high dollar purchase.


We do similarly as advised by our tax accountant. Vehicles and equipment over 10k are depreciated using an accelerated depreciation approach, this keeps the accumulated depreciation relatively close to our actual cost if we sell the vehicle, and then we do not have to report as much of a loss or gain on the sale when we get rid of it.

For people who do not know what this is, it is fairly simple. Say you buy a truck for 40k.
~The first year you depreciate it 1/2 or 20k. That leaves the vehicle with an estimated value of 20k.
~The second year you depreciate it 10k, or half of the 20k estimated value. This leaves an estimated value of 10k and 30k in accumulated depreciation.
~The third year you depreciate it 5k or half of the 10k estimated value. This leaves you with an estimated value of 5k and 35k in accumulated depreciation.

What we do for equipment between 5k-10k is use the standard depreciation. What that is we take the price of the equipment, minus the estimated end of use value, divided by the expected years of use. Basically We buy a piece of equipment for 10k and expect to replace it in 6 years, we estimate that it will be worth 1,500 when we get rid of it.
~ (10k-1,500) / 6 = 1,417
~ So we depreciate and expense $1,417 each year for six years, or until we sell the equipment, if we don't keep it for the 6 years.

For anything else and equipment under 5k, we expense it out the year of the purchase.

After all that, this year we did strongly consider taking a straight write off on the full cost of a piece of equipment as we wanted to get rid of some taxable cash. Under advise from the accountant we did not. With it looking like taxes will be increasing next year, it is better to pay the taxes and only depreciate a portion in 2012, we can always change our method and depreciate the remainder next year and get rid of that cash if the rates go high in 2013

Richard Martin
12-28-2012, 07:01 AM
Again I am only going by what my account advised me. "AMT may be avoided by staying out of the $150,000 to $415,000 income range".

And if you pick the phone up and call your accountant right now, he should say that he doesn't know what the amount to avoid is for 2012. This isn't for next year. It's for this year's taxes. They have not passed a patch for 2012 yet. And if they don't, it going to put a whole lot more revenue into the givernment's pockets. As it sits this second, the starting point for the AMT is $33,400. It's because of this uncertainty that no one will be able to file their income tax returns.

You have to remember, you're dealing with politics in Washington here. One of the scenarios I read about, had them not fixing anything right now. They will let all of the taxes rise for now. Then at some point down the road, they fix them. That way they can say that they lowered taxes. :laugh:

Duekster
12-28-2012, 07:25 AM
I am kind of hoping everything reverts, we go off the cliff and the AMT hits.

I do not have any hope that the overall tax system will be reformed but it seems the people are not worried about it. They still want to play the blame game.

We need a serious reform not patches and fixes to a badly broken system that is too complex for most tax payers.

Business taxes are another subject but for the life of me, I can not decide if I am better off as a C-Corp, S-Corp or as a LLC taxed on schedule C. I am thinking C Corp as I can stay an LLC and elect to be taxed this way. You can only change once every 5 years so until they settle on on something how I am supposed to know?

puppypaws
12-29-2012, 10:44 AM
What is boils down to is your country is not taking in enough money to remain solvent, yes, there is posturing for political positioning, but I can guarantee any position that is taken will not solve this country's problems.

You cannot have 53% of the people working to keep the other 47% not working up; it will never balance. The federal government has been borrowing from Peter to pay Paul for a very long time, and it is now taking its toll.

There are not enough cuts available to put a dent in the real problem, the only way, and I mean the only way to generate enough income for this country to ever have a chance of becoming solvent is to raise taxes, and I am not talking about a small amount. You've got too many people pulling from entitlements, and if this is to continue, "WE" are the ones that will foot the bill.

Your government is in a corner, and no matter what they do, it will only serve as a band-aid.

Richard Martin
12-29-2012, 11:29 AM
You cannot have 53% of the people working to keep the other 47% not working up; it will never balance.

It's actually much worse than that.

The US population stands at about 312 million. In November there were about 143 million employed. That's 45.8% supporting not only themselves but also the other 54.2% that doesn't have a job. They don't count the institutionalized population because it makes the numbers just that much worse. They have a habit of not including something whenever the numbers are bad. They say the government supports the institutionalized population. And who supports the government I say?

djagusch
12-29-2012, 11:42 AM
What is boils down to is your country is not taking in enough money to remain solvent, yes, there is posturing for political positioning, but I can guarantee any position that is taken will not solve this country's problems.

You cannot have 53% of the people working to keep the other 47% not working up; it will never balance. The federal government has been borrowing from Peter to pay Paul for a very long time, and it is now taking its toll.

There are not enough cuts available to put a dent in the real problem, the only way, and I mean the only way to generate enough income for this country to ever have a chance of becoming solvent is to raise taxes, and I am not talking about a small amount. You've got too many people pulling from entitlements, and if this is to continue, "WE" are the ones that will foot the bill.

Your government is in a corner, and no matter what they do, it will only serve as a band-aid.

A taxing problem only happens if money has been spent. We can raise taxes to 100% and still have issues. Cut the spending to bare bones, make laws so it doesn't ever get out of control, then propose a real tax plan to to get out of debt.

Any other way does not work.
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puppypaws
12-29-2012, 12:17 PM
A taxing problem only happens if money has been spent. We can raise taxes to 100% and still have issues. Cut the spending to bare bones, make laws so it doesn't ever get out of control, then propose a real tax plan to to get out of debt.

Any other way does not work.
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I agree with the statement, "We can raise taxes to 100% and still have issues," and we will continue to have issues no matter what, as long as population increases, and people continue to live longer. Social Security was not designed to support people living into their 80's and 90's. We may very well see this country go to its knees, and if the printing presses stop operating it may be sooner than later. This country is in a very bad position, the only thing we have to sell that other countries will buy, is what I produce, which is food, then military weaponry. Food is the only thing really producing what could be considered a steady income for this country, and if it was not for food production carrying the amount of weight it does, Chinese could very well be the dominant language taught in our schools.

djagusch
12-29-2012, 12:36 PM
I agree with the statement, "We can raise taxes to 100% and still have issues," and we will continue to have issues no matter what, as long as population increases, and people continue to live longer. Social Security was not designed to support people living into their 80's and 90's. We may very well see this country go to its knees, and if the printing presses stop operating it may be sooner than later. This country is in a very bad position, the only thing we have to sell that other countries will buy, is what I produce, which is food, then military weaponry. Food is the only thing really producing what could be considered a steady income for this country, and if it was not for food production carrying the amount of weight it does, Chinese could very well be the dominant language taught in our schools.

If anyone had a backbone in washington we would use tariffs and taxes in imports till americans can build them here at the same price point. Only reason china or any other country can become more of a factor than us is exporting goods to us. 1 yr exports stop to us china would crumble (or most other countries). Access to our economy is what makes us and breaks us. If we grew a backbone we could fix most our issues. Unfortnately most americans won't vote for hard times for the greater good.
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dhardin53
12-29-2012, 12:37 PM
And if you pick the phone up and call your accountant right now, he should say that he doesn't know what the amount to avoid is for 2012. This isn't for next year. It's for this year's taxes. They have not passed a patch for 2012 yet. And if they don't, it going to put a whole lot more revenue into the government's pockets. As it sits this second, the starting point for the AMT is $33,400. It's because of this uncertainty that no one will be able to file their income tax returns.

You have to remember, you're dealing with politics in Washington here. One of the scenarios I read about, had them not fixing anything right now. They will let all of the taxes rise for now. Then at some point down the road, they fix them. That way they can say that they lowered taxes. :laugh:

I total agree Richard, I am planing for the worst and hoping for the best. I understand that Government is going to stick it to us working guys and gals. But the reality (i hope) is with deductions I have been paying my fair share and just getting by. If and when the 2012 tax compilations come out and IF there is some ridicules increase. I foresee a tax payer revolt. I don't care if you voted of the president or are a Democrat or Republican. A shock to the economy that would have me pay some huge increase in want I owe with a 30 day notice would burst this love relationship with a lier and a cheat better known a "Dictator and Chief Obama". Oh I am sorry he won the election so he deserves it and its all the Republicans fault. The Bush excuse is about wore out.

ELS Landscape
12-29-2012, 12:58 PM
The country survived at the pre-bush tax rates with the full FICA coming out of the employee share. I do not see the so called cliff as a huge shock to the economy. The attempt to lower rates came trying to stop the tech bubble recession of 2000 that Bush inheritied as well as the blow to the economy after 911.

Bush thought he could starve the beast yet also increased spending. If we just roll back the taxes, make the tax code a little more simple and just hold spending at it's current rate for 10 years we would likely be out of this mess.

The American people are strong and will rally around a solid fiscal plan under good leadership. Too bad we do not have good leadership.

I am sick of worrying about tax issues and the impact they have on my business. We just need a good solid plan for the next 20 or so years so people can do their thing and grow out of this mess.

puppypaws
12-29-2012, 01:35 PM
If anyone had a backbone in washington we would use tariffs and taxes in imports till americans can build them here at the same price point. Only reason china or any other country can become more of a factor than us is exporting goods to us. 1 yr exports stop to us china would crumble (or most other countries). Access to our economy is what makes us and breaks us. If we grew a backbone we could fix most our issues. Unfortnately most americans won't vote for hard times for the greater good.
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This is a great thought, the problem is China...AND...Japan have us handcuffed to the point they basically tell America what they can, and cannot do in the economic world, it's a sad state of affairs. We buy China's trinkets, they turn around, take our money from buying their junk, and buy what is needed most...FOOD!!!

djagusch
12-29-2012, 01:40 PM
This is a great thought, the problem is China...AND...Japan have us handcuffed to the point they basically tell America what they can, and cannot do in the economic world, it's a sad state of affairs. We buy China's trinkets, they turn around, take our money from buying their junk, and buy what is needed most...FOOD!!!
Hence a backbone will solve it. Name one thing have besides cheap labor and lack of a epa stanard that we can not do/have here. There isn't.
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ELS Landscape
12-29-2012, 01:49 PM
Not only that but international corporations can set up multiple offices.

Intellectual property is owned by a division in the Cayman islands, product made in "insert location here" and sold in the US. They declared import value of the physical product could be penny's on the dollar for low tariffs on imports but the revenue goes to the Cayman islands because they own the patent / intellectual property.

We need to tax these international companies on the sales not on tariffs. No one likes the idea of a sales tax because we know who pays it but that would be the case on Tariffs or any other corporate taxes. In Texas we do have a program called a Franchise Tax and it is on gross sales over 1 million. Something like that would be more palatable because it is not collected at the register.

It is not a revenue problem as much as it is a spending problem. I can not keep going to my clients and asking for more money, I need to give employees a raise or look for other ways to make them happy. I have to look for ways to reduce expenses and increase productivity. Obviously, I have to look for ways to reduce my tax burden but that is hard to do when the rules are so fluid and the future is uncertain.

Richard Martin
12-29-2012, 01:52 PM
If we just roll back the taxes, make the tax code a little more simple and just hold spending at it's current rate for 10 years we would likely be out of this mess.

I'm afraid that you simply don't understand the depth of the mess that we're in. It is impossible to hold spending where it is without huge cuts to entitlements. The nation is aging. As the nation reaches retirement age, money and benefits have been promised. Do you tell the old woman that never worked a day in her life that you're going to cut her checks in half and good luck to her? Do you throw her out of her federally subsidized old folks home?

There is no fair and equitable solution to this mess. Life is not fair and some people will get thrown away like yesterday's trash. One of the basic laws of nature is that the strong survive. We've been trying to ignore that law for the last 90 years. We've been saying that we've risen above that. In the end though, only the strong will survive.

ELS Landscape
12-29-2012, 02:09 PM
I'm afraid that you simply don't understand the depth of the mess that we're in. It is impossible to hold spending where it is without huge cuts to entitlements. The nation is aging. As the nation reaches retirement age, money and benefits have been promised. Do you tell the old woman that never worked a day in her life that you're going to cut her checks in half and good luck to her? Do you throw her out of her federally subsidized old folks home?

There is no fair and equitable solution to this mess. Life is not fair and some people will get thrown away like yesterday's trash. One of the basic laws of nature is that the strong survive. We've been trying to ignore that law for the last 90 years. We've been saying that we've risen above that. In the end though, only the strong will survive.

I think I do understand it as much as anyone can.
I understand entitlements are growing and more people are joining the SSI pool. Social Security is actually doing pretty well it is the Medicare / Medicaid that is insolvent.

If we roll back all the Bush Tax cuts then we would have more revenue and if we freeze all spending then we are going to be OK. Granted more people will join and grow the Social Security program but we can freeze the COLA's for 5 years or so.

We have effectively frozen COLAs with the super low inflation. :waving: I do not know how much growth in SSI the boomer's are supposed to bring over the next 15 years.

Kelly's Landscaping
12-29-2012, 02:12 PM
The country survived at the pre-bush tax rates with the full FICA coming out of the employee share. I do not see the so called cliff as a huge shock to the economy.

Then let me help you with that shock you can't see coming

People earning more than $50,000 would face an increase in the tax rate on capital gains to 20 percent, from 15 percent. Dividends, which are currently taxed at a 15 percent rate, would also be taxed as ordinary income, with the top rate rising to 39.6 percent.

So dividends will be taxed at 39.6% plus the new Obama care surtax of 3.8% (this of course was never this high under Clinton) so 43.4% new rate for Dividends on the wealthy up from 15% thats nearly triple. It's not getting talked about much but if we get no deal and this happens say hello to a stock market losing 25-50% of its value. Now I could be wrong but my guess is that might be a Shock to some people.

ELS Landscape
12-29-2012, 02:27 PM
Then let me help you with that shock you can't see coming

People earning more than $50,000 would face an increase in the tax rate on capital gains to 20 percent, from 15 percent. Dividends, which are currently taxed at a 15 percent rate, would also be taxed as ordinary income, with the top rate rising to 39.6 percent.

So dividends will be taxed at 39.6% plus the new Obama care surtax of 3.8% (this of course was never this high under Clinton) so 43.4% new rate for Dividends on the wealthy up from 15% thats nearly triple. It's not getting talked about much but if we get no deal and this happens say hello to a stock market losing 25-50% of its value. Now I could be wrong but my guess is that might be a Shock to some people.

If you add Obama's new taxes that could be bad. I am just talking about rolling back to the Clinton Era or pre-Bush tax cuts. I know, I hate taxes as much as anyone because I feel much of the spending is wasted.

Hence the reason I say we also cap and freeze spending.

Not a huge fan of double taxation of dividends but I say tax them as ordinary income and do not tax them at the corporate level. This would give corporations more incentives to pay more dividends since they do not have to pay 35% income tax on them.

ELS Landscape
12-29-2012, 02:54 PM
Found this -

Actuarial Estimates

The actuarial status of the program over the next 75 years is measured in terms of annual cost and income as a percentage of taxable payroll, trust fund ratios, the actuarial balance (also as a percentage of taxable payroll), and the open group unfunded obligation (expressed in present-value dollars, as a percentage of taxable payroll, and as a percentage of gross domestic product (GDP)). Consideration of Social Security’s annual cost and income as a percentage of the total U.S. economic output or GDP provides an additional important perspective.

The year-by-year relationship among income (excluding interest), cost (including scheduled benefits), and expenditures (including payable benefits) for the OASDI program is illustrated in figure II.D2 for the full 75-year period. All values are expressed as percentages of taxable payroll and, in the case of income and cost, are referred to as the income rate and the cost rate, respectively. Under the intermediate assumptions, demographic factors would by themselves cause the cost rate to rise rapidly for about the next two decades before leveling off in about 2035. For the next 5 years, this effect will be obscured by the sharp increase in the cost rate that occurred when the recent recession led to a reduction in the tax base and a surge in beneficiaries. The projected income rate is stable at about 13 percent throughout the 75-year period except for a dip in 2011 due to an expected $10 billion downward adjustment to 2011 income that corrects for excess payroll tax revenue credited to the trust funds in earlier years.

Annual cost exceeded non-interest income in 2010 and is projected to continue to be larger throughout the remainder of the 75-year valuation period. Nevertheless, from 2010 through 2022, total trust fund income, including interest income, is more than is necessary to cover costs, so trust fund assets will continue to grow during that time period. Beginning in 2023, trust fund assets will diminish until they become exhausted in 2036. Non-interest income is projected to be sufficient to support expenditures at a level of 77 percent of scheduled benefits after trust fund exhaustion in 2036, and then to decline to 74 percent of scheduled benefits in 2085.

http://www.ssa.gov/oact/tr/2011/images/II_project_IID2.gif




The estimated number of workers per beneficiary is shown in figure II.D3.
http://www.ssa.gov/oact/tr/2011/images/II_project_IID3.gif
There were about 2.9 workers for every OASDI beneficiary in 2010. This ratio had been extremely stable, remaining between 3.2 and 3.4 from 1974 through 2008, and is lower for 2009 and 2010 due to the economic recession. The projected future increase in the cost rate reflects a projected decline in the number of covered workers per beneficiary. The ratio of workers to beneficiaries is projected to decline, even as the economy recovers, because the workers of the baby-boom generation are being replaced in the workforce by lower-birth-rate generations. This ratio reaches 2.1 by 2035 when the baby-boom generation will have largely retired, with a further gradual decline thereafter due to increasing longevity.

http://www.ssa.gov/oact/tr/2011/II_D_project.html

larryinalabama
12-29-2012, 03:11 PM
Between xwives and increasing taxes it will no longer be profitable for me to make money. To add to that Im approaching 50 so Ive made up mind to slow way down.

puppypaws
12-29-2012, 03:34 PM
We can talk about this until we are blue in the face, but until someone comes up with an idea of how to generate income from outside countries by producing something (anything) we can make in-house, you know, kind of the way China has gotten our money, we are in a hole that will be virtually impossible to dig out of.

This country has got to generate income, the same as you and I must work to provide a good or service someone is willing to pay for. We cannot continue to print money and circulate what we have, because as we all know, at this point in time there is just not enough circulating. I guess a large part of what we need is hidden offshore, now how do we get it back into circulation, this is the question.

ELS Landscape
12-29-2012, 03:42 PM
We can talk about this until we are blue in the face, but until someone comes up with an idea of how to generate income from outside countries by producing something (anything) we can make in-house, you know, kind of the way China has gotten our money, we are in a hole that will be virtually impossible to dig out of.

This country has got to generate income, the same as you and I must work to provide a good or service someone is willing to pay for. We cannot continue to print money and circulate what we have, because as we all know, at this point in time there is just not enough circulating. I guess a large part of what we need is hidden offshore, now how do we get it back into circulation, this is the question.

I do not want to get too far off topic but globalization has to happen and has happened over the last 40 years. It will likely take another 40 to equalize things as we still have large parts of Asia, South America and India to go. I am not sure if Africa and the Middle East will ever get their act together.

We have sucked most the blue collar manufacturing jobs out of the country. We do still export as much as any other country if I am not mistaken but much of the process is automated. Manufacturing involving hand work is mostly off shore.

If it were not for our military strength and our industrial military complex the us dollar would be worth a lot less the way it has been printed in the last 8 years.

Just looked, the US was 3rd in exports.

Richard Martin
12-29-2012, 03:46 PM
Found this -

Actuarial Estimates

The actuarial status of the program over the next 75 years is measured in terms of annual cost and income as a percentage of taxable payroll, trust fund ratios, the actuarial balance (also as a percentage of taxable payroll), and the open group unfunded obligation (expressed in present-value dollars, as a percentage of taxable payroll, and as a percentage of gross domestic product (GDP)). Consideration of Social Security’s annual cost and income as a percentage of the total U.S. economic output or GDP provides an additional important perspective.

The year-by-year relationship among income (excluding interest), cost (including scheduled benefits), and expenditures (including payable benefits) for the OASDI program is illustrated in figure II.D2 for the full 75-year period. All values are expressed as percentages of taxable payroll and, in the case of income and cost, are referred to as the income rate and the cost rate, respectively. Under the intermediate assumptions, demographic factors would by themselves cause the cost rate to rise rapidly for about the next two decades before leveling off in about 2035. For the next 5 years, this effect will be obscured by the sharp increase in the cost rate that occurred when the recent recession led to a reduction in the tax base and a surge in beneficiaries. The projected income rate is stable at about 13 percent throughout the 75-year period except for a dip in 2011 due to an expected $10 billion downward adjustment to 2011 income that corrects for excess payroll tax revenue credited to the trust funds in earlier years.

Annual cost exceeded non-interest income in 2010 and is projected to continue to be larger throughout the remainder of the 75-year valuation period. Nevertheless, from 2010 through 2022, total trust fund income, including interest income, is more than is necessary to cover costs, so trust fund assets will continue to grow during that time period. Beginning in 2023, trust fund assets will diminish until they become exhausted in 2036. Non-interest income is projected to be sufficient to support expenditures at a level of 77 percent of scheduled benefits after trust fund exhaustion in 2036, and then to decline to 74 percent of scheduled benefits in 2085.

http://www.ssa.gov/oact/tr/2011/images/II_project_IID2.gif

The estimated number of workers per beneficiary is shown in figure II.D3.
http://www.ssa.gov/oact/tr/2011/images/II_project_IID3.gif
There were about 2.9 workers for every OASDI beneficiary in 2010. This ratio had been extremely stable, remaining between 3.2 and 3.4 from 1974 through 2008, and is lower for 2009 and 2010 due to the economic recession. The projected future increase in the cost rate reflects a projected decline in the number of covered workers per beneficiary. The ratio of workers to beneficiaries is projected to decline, even as the economy recovers, because the workers of the baby-boom generation are being replaced in the workforce by lower-birth-rate generations. This ratio reaches 2.1 by 2035 when the baby-boom generation will have largely retired, with a further gradual decline thereafter due to increasing longevity.

http://www.ssa.gov/oact/tr/2011/II_D_project.html

I don't put much faith in government projections as they're always low. Did they break out the specific interest rates that their projections are projecting. The Feds are paying next to nothing on the money they borrowed from the SSI program. And as you can clearly read in this snippet, they cannot continue to pay out at the current rates.

As recently as 2004 they projected SSI to be solvent until 2044. In just a few short years they moved the date to 2036. As you get closer to the date they have to keep adjusting it to a shorter and shorter period.

ELS Landscape
12-29-2012, 04:04 PM
I don't put much faith in government projections as they're always low. Did they break out the specific interest rates that their projections are projecting. The Feds are paying next to nothing on the money they borrowed from the SSI program. And as you can clearly read in this snippet, they cannot continue to pay out at the current rates.

As recently as 2004 they projected SSI to be solvent until 2044. In just a few short years they moved the date to 2036. As you get closer to the date they have to keep adjusting it to a shorter and shorter period.

Two reasons for the recent adjustment is the recession ( less workers) and the 2% cut on the employee share of FICA.

Wiki has a good read on trade deficits too http://en.wikipedia.org/wiki/Balance_of_trade


The case of the United States

Since the stagflation of the 1970s, the U.S. economy has been characterized by slower GDP growth. In 1985, the U.S. began its growing trade deficit with China. Over the long run, nations with trade surpluses tend also to have a savings surplus. The U.S. generally has lower savings rates than its trading partners, which tend to have trade surpluses. Germany, France, Japan, and Canada have maintained higher savings rates than the U.S. over the long run.[11]

Few economists believe that GDP and employment can be dragged down by an over-large deficit over the long run.[12][13] Others believe that trade deficits are good for the economy.[14] The opportunity cost of a forgone tax base may outweigh perceived gains, especially where artificial currency pegs and manipulations are present to distort trade.[15]

Wealth-producing primary sector jobs in the U.S. such as those in manufacturing and computer software have often been replaced by much lower paying wealth-consuming jobs such as those in retail and government in the service sector when the economy recovered from recessions.[7][16][17] Some economists contend that the U.S. is borrowing to fund consumption of imports while accumulating unsustainable amounts of debt.[4][18]

In 2006, the primary economic concerns focused on: high national debt ($9 trillion), high non-bank corporate debt ($9 trillion), high mortgage debt ($9 trillion), high financial institution debt ($12 trillion), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (-24% of GDP),[4] high trade deficits, and a rise in illegal immigration.[18][19]
These issues have raised concerns among economists and unfunded liabilities were mentioned as a serious problem facing the United States in the President's 2006 State of the Union address.[19][20] On June 26, 2009, Jeff Immelt, the CEO of General Electric, called for the U.S. to increase its manufacturing base employment to 20% of the workforce, commenting that the U.S. has outsourced too much in some areas and can no longer rely on the financial sector and consumer spending to drive demand.[21]

Kelly's Landscaping
12-29-2012, 04:16 PM
Iv run into a few real stubborn clowns who know just enough about ww2 and the weapons used to be dangerous. Their dead wrong about their conclusions but man are they certain they are right and why because they read it on the Wikipedia. But I tend to have an issue with a site that is written by the readers.

This is how the site describes its self.

"Since its creation in 2001, Wikipedia has grown rapidly into one of the largest reference websites, attracting 470 million unique visitors monthly as of February 2012.[1] There are more than 77,000 active contributors working on over 22,000,000 articles in 285 languages. As of today, there are 4,131,105 articles in English. Every day, hundreds of thousands of visitors from around the world collectively make tens of thousands of edits and create thousands of new articles to augment the knowledge held by the Wikipedia encyclopedia. (See the statistics page for more information.)

People of all ages, cultures and backgrounds can add or edit article prose, references, images and other media here. What is contributed is more important than the expertise or qualifications of the contributor. What will remain depends upon whether it fits within Wikipedia's policies, including being verifiable against a published reliable source, thereby excluding editors' opinions and beliefs and unreviewed research, and whether the content is free of copyright restrictions and contentious material about living people. Contributions cannot damage Wikipedia because the software allows easy reversal of mistakes and many experienced editors are watching to help ensure that edits are cumulative improvements. Begin by simply clicking the Edit link at the top of any editable page!"

For that reason I no longer use them as my source material. Just because its on the internet doesn't make it true.

ELS Landscape
12-29-2012, 04:21 PM
Wiki can be good or bad. Some of the citations used for this article went to bad links.
The editors are pretty good about alerting folks to problems on the information.

If the page is well written with citations to support their writtings then I think WIKI is a great source.

Duekster
12-29-2012, 06:00 PM
Just about time to start year end. W3s/941 and quarterly reports. Planning for the New Year